Friday, November 19, 2010

Flat week overall but a lot of action

All indexes gave a "sell' signal on Monday, followed by a good confirmation on Tuesday but bulls decided to rain on bears' parade by the end of the week. Picture is mixed at this time, we have an EMA crossing but price is above both EMAs and is touching 5 days SMA. Daily DMI is also neutral so we need to wait for the next week for the final verdict. 

The ball is still in bears' court but not as much as it was on Tuesday when SPX went down to 1177. As you noticed from chart bellow the 5 days moving average is a pretty good support level when in an uptrend and good resistance level when market is plunging. It worked actually better than EMAs crossing that gave me too small whipsaws but on the other hand EMAs gave me a better entry-exit points. Please notice this is a 4 hours chart so I adjusted SMA 120 to SMA 30. 

I don't worry about market changing the trend again, I am going to take a small loss and change sides, I worry about a trendless market like we had last year exactly at this time between November and December. This is only time my timing system is losing money. The good news is I am way ahead of the game and even with some small whipsaws I am going to end this year deeply on green. Let's hope is not going to be the case. We are still good with our shorts and odds are slightly in our favor since we have a bearish EMA crossing and SPX made two unsuccessful attempts to climb above 5 days SMA. Dow and Nasdaq look a little bit more bearish than SPX, neither of them are touching 5 days SMA.

Have a nice weekend!


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